In 2021, market momentum often compensated for a lack of internal discipline; in the current climate, the market no longer offers that safety net. For much of the past decade, performance was helped by conditions that sat partly outside the portfolio company itself: debt was cheaper, multiples rose more readily and liquidity was easier to find. Successful returns now depend on operational value creation and long-term sustainability. Investors are no longer patient; they are asking harder questions about exactly when and how their capital will be returned. Gone are the easy days of money.
Bain’s 2026 Global Private Equity Report captures the shift in a single line: “12 is the new 5”. Deals that once required around 5% annual EBITDA growth to achieve target returns now require something closer to 10% to 12%. Bain also notes that distributions as a share of NAV have remained at around 14% for four consecutive years, while average holding periods at exit are now around seven years.
Collectively, the data is quite clear: returns now hinge on operational execution and investors expect precise justification for longer hold periods. This shift exposes laggards; while some firms built disciplined reporting early, others are only now forced to modernize.
Why the operating model now matters more
When leverage and multiple expansion contribute less, firms need a clearer view of performance, a firmer grip on what is driving it and a faster route from information to action. Bain underlines the point when it notes that the high prices paid for assets in 2021 and 2022 meant acceptable returns required unusually strong EBITDA growth.
The finance function does not set the investment thesis. But in a market where that thesis has to hold for seven years rather than five, the finance platform often determines whether problems are seen in time to act.
First signs of weakness
For CFOs, the strain rarely first appears in strategy. It appears in the record. Information arrives late or in inconsistent formats. Board packs take more iteration than they should. Investor questions trigger work that ought already to have been done. Exit preparation exposes gaps between historical records, reporting outputs and the assumptions behind them. What looked manageable in a quarterly cycle can become far more expensive when a buyer, lender or incoming investor wants the numbers tied back without delay and in one version.
The problem is not usually that the firm lacks data; it is that the numbers do not reconcile quickly enough or clearly enough for someone to act on them with confidence.
What this means for CFOs
For finance leaders, the problem is rarely the number itself. It is whether it arrives in time to be useful. That usually comes down to three things:
- Seeing underperformance soon enough to change the outcome
If the first clear picture arrives after quarter-end, the team is left explaining a problem rather than helping the business respond to it.
- Tracing performance without rebuilding the story each time
When the underlying record does not hold together, time goes into reconciliation rather than judgement.
- Returning cash without turning each distribution into a new operational exercise
Closing, investor reporting and distribution execution should support liquidity, not create delay around it.
Why liquidity has become an operating test
Investors are not simply watching unrealised value and waiting patiently for it to resolve. They are watching whether capital comes back, how clearly the path to realisation is explained and whether the platform appears capable of turning value into cash in a slower market. Bain’s data on subdued distributions and extended holding periods shows how much now rests on that ability. As the moniker goes, DPI is the new IRR.
LPs have watched it. They are no longer asking only what a portfolio is worth. They are also asking whether the firm running it knows how to get the money out. The seven-year hold is therefore not just a market fact. In some cases, it is also a sign that the platform was less ready for exit than the investment case assumed.
For those firms, the reporting process stops being an administrative matter. It becomes part of how the platform is judged.
Where Langham Hall sits
At Langham Hall, we help finance teams build the reporting rhythm, controls and underlying discipline that stand up when scrutiny increases. That matters not because process is virtuous in itself, but because firms with a steadier record can move faster when the window opens, answer questions more quickly and return cash with fewer surprises.
Private equity has always rewarded judgement. What changes in a market like this is that weak discipline stops being survivable.
